An end to Selangor’s water problem?

There is great anticipation that the state govt will be able to announce a final solution next month


After years of delay and going down many rabbit holes, there is great anticipation that the Selangor state government will be able to announce a final solution to the state’s water supply conundrum.

Sometime in early July, the state government is expected to finalise the takeover plans for Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) — the last piece of the puzzle in the state’s water restructuring programme that began five years ago.

Under a 2014 agreement between the then Opposition-held state government, water supply concession holders were to be grouped under a state-owned entity — Pengurusan Air Selangor Sdn Bhd (Air Selangor) — if only Splash shareholders had agreed to the state’s valuation for its assets.

The takeover of Puncak Niaga Holdings Bhd, Konsortium Abbas Sdn Bhd and Syarikat Bekalan Air Selangor Sdn Bhd were relatively easy for a combined offer of RM6.59 billion, but Gamuda Bhd held out for more money to compensate for its investment in Splash.

Gamuda claimed that accepting Selangor’s RM250.6 million offer would cause a divestment loss of RM920 million, while Splash said the price was unfair because it had the longest remaining tenure of all the water concessionaires.

The Selangor government then commissioned an independent valuation on Splash to see if it could revise the offer, while the then Barisan Nasional (BN)-led federal government also commissioned its own valuation.

Selangor has shared the valuation result with the previous BN government. The then federal government, in turn, did not share its valuation report, but just instructed Selangor 
to pay 40% of whatever the sum its valuers had recommended.

The Selangor state government said such instruction was invalid and against the master plan it signed in 2014.

In that agreement, some RM2 billion in cash was released by the 
federal-owned Pengurusan Aset Air Bhd (PAAB) to the state’s Air Selangor to finance the acquisition of the four water concessionaires.

In return, the state government will transfer an equivalent worth of assets to PAAB, which will subsequently be leased back to the state’s water service provider.

A major water disruption during maintenance work at Splash’s Sungai Selangor Phase 3 (SSP3) Bukit Badong water treatment plant in March seemed to open a window for Selangor to take over the company for breach of contract.

Association of Water and Energy Research Malaysia president S Piarapakaran said the Selangor government had the option to review the terms of the concession deal if there was any breach of contract.

Piarapakaran says the federal administration should not use a huge sum of public money to buy Splash

Piarapakaran said the federal administration should not use a huge sum of public money to buy Splash and instead suggested that the SSP3 failure could trigger a takeover or 
nullification of Splash’s contract.

He said the nullification of the Splash contract could be done either for the SSP3 plant alone or the whole company’s assets, depending on the concessionaire agreement.

Besides politicians and consumer associations, companies involved in the matter would also want an end of the water concession dispute — such as Kumpulan Perangsang Selangor Bhd (KPS) which holds a 30% Splash stake, as reported by The Malaysian Reserve last month.

“We just didn’t have the political will because we were not on the right side of the fence.

“Today, Selangor is part of the ruling coalition, thus we hope the political will is there to resolve this to the favour of not only KPS, but more importantly to Selangor water consumers who need improvement in water, service and distribution qualities.

“We hope July 4, 2018, would be the final deadline and no further expansion after that,” KPS chairman Raja Datuk Idris Raja Kamarudin (picture) said.